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U.S. v. AM. SOC. OF COMPOSERS

July 11, 1991

UNITED STATES OF AMERICA, PLAINTIFF,
v.
AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, DEFENDANTS. IN THE MATTER OF THE APPLICATION OF TURNER BROADCASTING SYSTEM, INC., APPLICANT, FOR THE DETERMINATION OF REASONABLE LICENSE FEES. IN THE MATTER OF THE APPLICATIONS OF USA NETWORK, LIFETIME TELEVISION, THE DISCOVERY CHANNEL, THE CBN FAMILY CHANNEL, BLACK ENTERTAINMENT TELEVISION, INC., ARTS & ENTERTAINMENT CABLE NETWORK, THE DISNEY CHANNEL, HOME BOX OFFICE, INC., SHOWTIME NETWORKS INC., MTV NETWORKS, INC., OPRYLAND USA, INC., PLAYBOY VIDEO ENTERTAINMENT GROUP, INC., AMERICAN MOVIE CLASSICS COMPANY, SPORTSCHANNEL PRISM ASSOCIATES, BRAVO COMPANY AND COUNTRY MUSIC TELEVISION, INC., APPLICANTS, FOR LICENSES FOR THEIR CABLE PROGRAM SERVICES.



The opinion of the court was delivered by: Michael H. Dolinger, United States Magistrate Judge:

    MEMORANDUM AND ORDER

This proceeding is an outgrowth of certain provisions of a Consent Decree (the "Decree") originally entered into in 1941 by the United States Department of Justice and the American Society of Composers, Authors and Publishers ("ASCAP"). The Decree, as amended in 1950, regulates the manner in which ASCAP licenses for public performance the copyrighted music of its members.

The applicants in this proceeding all function as so-called cable program suppliers. In brief, they each assemble a package of programming, which they typically transmit to numerous cable system operators. The system operators, which are licensed locally to operate in specified geographic areas, in turn transmit the programming over cable to the televisions of residents within their locale who pay subscription fees to be hooked up to the cable and receive the programming.

At present, the parties have presented to the court for decision two questions that require interpretation of portions of the Decree. The first is whether the Decree requires ASCAP to issue a public performance license to the cable program suppliers that covers not only the transmission of the suppliers' programming to the local cable system operators, but also the transmission of the programming by the system operators to the viewers.*fn1 The second is whether the Decree requires ASCAP to issue to the cable program suppliers, on demand, a so-called per-program license as an alternative to its more commonly used blanket license. For the reasons that follow, I conclude that the Decree requires ASCAP to make both of these licenses available to cable program suppliers.

PROCEDURAL POSTURE

The current proceeding was initiated by the Turner Broadcasting System, Inc. ("TBS") on January 13, 1989. Although styled as an application for the setting of fees under Article IX(A) of the Decree, the petition principally sought a more preliminary form of relief — an order that ASCAP make available to TBS a performance license that covered the transmission of all of its programming "through to the viewer." Such a license — which ASCAP concedes it is required to issue to the traditional "over the air" networks — is commonly referred to as "licensing at the source," presumably because the license is issued to the entity that is the source of the programming. The applicants assert that the relief they seek is necessary because ASCAP announced in 1988, for the first time, that it would no longer agree to licensing at the source for the cable program suppliers — including TBS's three cable programming services, Cable News Network, Headline News, and Turner Network Television — and would instead provide only a license that was limited to the program suppliers' transmission of their programming to local system operators; the license would therefore not cover the transmission of the programs by the system operators to the viewing public. In effect, ASCAP was asserting a right to demand licenses from both the program supplier and the system operator for the performance of ASCAP music as part of the programming on cable television channels.

TBS's application was ultimately joined by 16 other entities, all of which also supply programming to system operators for transmission to cable viewers. All of these cable program suppliers reported that they had been stymied in seeking a license from ASCAP that would cover the public performance of ASCAP music in programming distributed by them. In each instance, ASCAP had advised the suppliers that it did not believe itself bound to issue such a license to them, and that it intended to obtain separate licenses from both the cable program suppliers and the cable system operators.

ASCAP has moved for partial summary judgment, urging dismissal of that portion of the cable program suppliers' petitions that seeks an order compelling the issuance to them of a license that would cover programming transmissions by the system operators. ASCAP premises its motion on the contention that Article V(A) of the Decree, which requires ASCAP to issue such a license to "telecasting networks" for programming aired by the stations "affiliated" with such networks, does not cover cable program suppliers and their affiliated cable system operators. The applicants have opposed the motion, and although not formally cross-moving for summary judgment, have urged that the court grant their requested relief on the current motion.

After the briefing and argument of ASCAP's motion, the parties agreed to broaden the scope of this proceeding to encompass another issue of decree interpretation. In the previously filed Showtime/The Movie Channel Article IX(A) proceeding, Showtime raised at trial the question of its entitlement under the Decree to a so-called per-program license from ASCAP. Ultimately, Showtime and ASCAP agreed to the withdrawal of that claim from the Showtime proceeding, and its resurrection in the current proceeding. Accordingly, the parties have agreed to expand the scope of ASCAP's previously filed summary judgment motion to encompass the question of whether cable program suppliers are entitled, under Article VII(B) of the Decree, to a per-program license as an alternative to a blanket license.

In supplemental briefing, the applicants have argued that they are "television broadcasters" within the meaning of Article VII(B) of the Decree, and hence are entitled to such a license. In response, ASCAP has pressed the argument that this term applies only to over-the-air or traditional television stations, and that accordingly it has no obligation to provide a per-program license to the applicants.

With the consent of the parties, the court invited the Department of Justice, as a cosigner of the Decree, to offer its views on both issues. On each issue, the Department — although not fully agreeing with ASCAP's interpretation of the Decree or its legal analysis — has concluded that the Decree does not obligate ASCAP to issue the types of licenses sought by the applicants.

THE EVOLUTION OF THE CONSENT DECREE

ASCAP is a membership association consisting of approximately 40,000 composers and music publishers. American Society of Composers, Authors and Publishers v. Showtime/The Movie Channel, Inc., 912 F.2d 563, 573 (2d Cir. 1990) (reproducing Memorandum and Order of the District Court). The members own copyrights in more than three million musical compositions, see, e.g., id., and have authorized the Society to grant licenses for the public performance of those compositions.

In general terms, the 1941 Decree required that ASCAP's members give the Society only a non-exclusive agency to issue performance licenses, thus retaining for the members themselves the right to negotiate directly for such licenses or to assign that role to another person or entity. The Decree also prohibited ASCAP from "discriminating in price or terms between licensees similarly situated." Id., Art. II(2).

The Decree addressed in some detail the manner in which ASCAP was to issue licenses for the performance of music by radio broadcasters. Thus, it prohibited ASCAP from insisting on a license fee for commercial radio programs that was predicated in whole or part on the revenues received by the broadcaster from programs that contained no music licensed by ASCAP. Id., Art. II(3).*fn2 It also required ASCAP to issue to radio broadcasters, on request, a per-program license, and to quote fees for such a license that would not frustrate "the purpose of this subparagraph to afford radio broadcasters alternative bas[e]s of license compensation." Id.

The Decree further provided that ASCAP must issue licenses for "network radio broadcasting" that would cover, for a single license fee, "the simultaneous broadcasting of . . . performance[s] by all stations on the network." Id., Art. II(4). Thus, ASCAP was prohibited from "requiring separate licenses for such several stations for such performance." Id. Similarly, the Decree required ASCAP to issue to producers or distributors of electronic transcriptions or other recordings a license that covered the public performance of recordings prepared for performance on any designated radio programs. In such a circumstance ASCAP would be barred from seeking a separate license from any radio stations designated by the licensee for the performance of the recording. Id., Art. II(5).

The Decree contained additional limitations on ASCAP's licensing practices, including a requirement that it issue licenses on demand by "users other than broadcasters," id., Art. II(6), and that it issue to "radio broadcasters," if so requested, "a license on a per performance or per program basis." Id., Art. II(7). The Decree also prohibited ASCAP and its members from withholding from performance any composition in the ASCAP repertory for the purpose of extracting "additional consideration." Id., Art. II(8).

The Decree also addressed a variety of internal ASCAP matters, including membership eligibility, the election of its Board of Directors, and the distribution of fees to the members. Finally, it provided for monitoring by the Department of Justice and continuing jurisdiction by this court. Id., Arts. II(9), (10), (11); III, IV, VI.

The 1941 Decree was superseded in 1950 by a substantially revised agreement between the Government and ASCAP. See United States v. ASCAP, 1950-51 Trade Cas. (CCH) ¶ 62,595 (S.D.N Y March 14, 1950). The amendment of the Decree was apparently instigated by a number of related developments, two of which are of particular pertinence in this case. First, during the late 1940's, radio ceased to be the only broadcast medium available to American households. Although still in its infancy, television began to be recognized as a potentially significant transmitter of programming to the American public. It therefore became necessary to address the manner in which its use of copyrighted music would be licensed by ASCAP.

Second, in 1948 two federal courts were confronted with an antitrust challenge to the manner in which ASCAP was licensing the performance rights to copyrighted music incorporated in motion pictures. The controversy focussed on ASCAP's practice of granting movie producers solely the right to incorporate the music on the soundtrack of the film — the so-called synchronization right — while withholding the right to perform the music publicly when the film was played in movie theatres. Rather than granting both rights to the movie producers, ASCAP insisted that each local film exhibitor separately obtain a public performance license for the films played in its theatres.

The movie exhibitors challenged this practice, and in 1948 Judge Leibell in this court and Judge Nordbye in the District of Minnesota both concluded that ASCAP's practice of splitting the rights necessary to exhibit the films constituted a violation of the Sherman Act. See Alden-Rochelle Inc. v. ASCAP, 80 F. Supp. 888, 893-95 (S.D.N.Y. 1948); M. Witmark & Sons v. Jensen, 80 F. Supp. 843, 848-50 (D.Minn. 1948). In consequence, Judge Leibell enjoined ASCAP from dealing with the film exhibitors in the licensing of ASCAP music for public performance in films. Alden Rochelle Inc. v. ASCAP, 80 F. Supp. 900, 903-05 (S.D.N.Y. 1948).

In the wake of these developments, the Justice Department and ASCAP undertook negotiations to modify the 1941 Decree. See generally Timberg, "The Antitrust Aspects of Merchandising Modern Music: The ASCAP Consent Judgment of 1950", 19 J.Law & Contemp.Probs. 294, 299-306 (1954). The final version of the amended Decree was presented in March 1950 to Judge Goddard, who had overseen the original 1941 Decree, and he approved it.*fn3

The 1950 Decree contains a number of significant changes from its predecessor. The most prominent of these involve the expansion of its terms to cover television, the incorporation of provisions designed to address the issues raised in Alden-Rochelle, and the creation of a so-called rate court, with attendant terms governing the procedures for obtaining a license and court determination of any disputes concerning fees.

Under the terms of the 1950 Decree, ASCAP must issue a license to "any user" who makes a written request for it, but may not issue, except on written request, a license limited to specific compositions in its repertoire. 1950 Decree, Art. VI. The Decree also specifies certain licensing requirements for specific types of users. Thus, in connection with motion pictures, the Decree embodies the holding of Alden-Rochelle and Witmark by requiring ASCAP to issue to the movie producer, on demand, "a single license of motion picture performance rights" for the entire United States, id., Art. V(C), and barring ASCAP from negotiating with or collecting money from "any motion picture theatre exhibitors" concerning motion picture performance rights. Id., Art. IV(E).

As for the broadcast media, they are treated together with wired music services, and the relevant provisions are those centrally at issue in this case. Thus, Article V(A) represents a modified version of the 1941 provision governing licensing at the source:

  Defendant ASCAP is hereby ordered and directed to
  issue, upon request, licenses for rights of public
  performance of compositions in the ASCAP repertory
  as follows:
      (A) To a radio broadcasting network,
    telecasting network or wired music service . .
    ., on terms which authorize the simultaneous and
    so-called "delayed" performance by broadcasting
    or telecasting, or simultaneous performance by
    wired music service, as the case may be, of the
    ASCAP repertory

    by any, some or all of the stations in the
    United States affiliated with such radio network
    or television network or by all subscriber
    outlets in the United States affiliated with any
    wired music service and [t]o not require a
    separate license for each station or subscriber
    for such performances;. . . .

The Decree also reincorporates the old "licensing at the source" requirement with respect to manufacturers, producers and distributors of recordings, and thus limits ASCAP to a single license for recordings that are "recorded for performance on specified commercially sponsored radio programs or television programs . . ." In such a case, the license to the manufacturer, producer or distributor is to cover the broadcasting of the recording "by all radio stations or television stations in the United States enumerated by the licensee without requiring separate licenses for such enumerated stations for such performance." Id., Art. V(B).

In a separate set of provisions addressed to the licensing of public performance rights for "radio broadcasting and telecasting," ASCAP is prohibited — as it was in the 1941 Decree in connection with radio broadcasting — from imposing fees for commercial programming based upon a percentage of income received by the licensee from programs with no ASCAP music, unless requested by the licensee. Id., Art. VII(A). ASCAP is also required to issue per-program licenses "to any unlicensed radio or television broadcaster, upon written request." Id., Art. VII(B). Under the terms of the Decree, the fees for such a license for commercial programs may be based, at the option of ASCAP, either on a fixed payment per program or on a percentage of the revenues paid by the sponsors of the program. Id., Art. VII(B)(1).*fn4

In provisions of more general applicability, the Decree reiterates the requirements of its predecessor that ASCAP receive from its members only a non-exclusive right to negotiate for performance rights. Id., Art. IV(B). It also contains two anti-discrimination provisions. One prohibits ASCAP from entering into any license "which discriminates in license fees or other terms and conditions between licensees similarly situated." Id., Art. IV(C). The other directs ASCAP "to use its best efforts to avoid any discrimination among the respective fees fixed for the various types of licenses which would deprive the licensees or prospective licensees of a genuine choice from among such various types of licenses." Id., Art. VIII.

As noted, the Decree also establishes a set of procedures for fee-setting. Article IX(A) requires ASCAP, on receipt of a written license application, to advise the applicant in writing "of the fee which it deems reasonable for the license requested." If the parties cannot agree on a fee within sixty days, the applicant may apply to the court for the setting of "a reasonable fee." The Decree also provides that if the court sets a fee, ASCAP must offer "a license at a comparable fee to all other applicants similarly situated who shall thereafter request a license." Id., Art. IX(C).

Finally, as with its predecessor, the 1950 Decree contains a series of provisions governing the membership and management of ASCAP, voting rights, distribution of fees, and other matters relating to internal administration, as well as a provision for the continuing jurisdiction of this court. Id., Arts. IV(E), X-XVII.

ANALYSIS

ASCAP seeks summary judgment with respect to both of the applicants' requests for relief. Insofar as the applicants seek an order requiring a "through to the viewer" license under Article V(A) of the 1950 Decree, ASCAP argues principally that the applicants are not "telecasting networks" and the cable system operators are not "affiliated stations" within the meaning of Article V(A) of the Decree, and are therefore not entitled to such licensing at the source. ASCAP rests this argument on the conceded differences in the technology of cable and over-the-air television transmission and certain acknowledged dissimilarities between the financial arrangements found in the traditional over-the-air television industry and in the far newer cable television industry. Since cable television did not exist in 1950, ASCAP suggests, the drafters of the Decree could not have intended to include those novel entities within the language of the Decree.

As for the per-program issue, ASCAP again rests its argument principally on the notion that cable television is a new form of mass communication. Accordingly, ASCAP urges that it was not intended to be covered by the term "television broadcaster" found in Article VII(B) of the Decree.

In resisting these arguments, the applicants suggest that the differences between the manner of operation of the over-the-air networks and the cable program suppliers are immaterial in view of the purposes of the Decree, and particularly the purposes of Articles V(A) and VII(B). They invoke the asserted functional equivalence of the original television networks and the cable program suppliers, and suggest as well that the Decree was designed to be forward-looking and to encompass all forms into which the television industry, which was still in its infancy in 1950, might thereafter evolve.

Specifically with respect to the licensing-at-the-source question, the applicants assert, as an alternative argument, that even if the term "telecasting network" is narrowly defined, they should nonetheless be entitled to the same form of license as the Decree guarantees to the traditional television networks based on the anti-discrimination provision of Article IV(C). The applicants also invoke the language of Article IX, which requires ASCAP to quote a fee on demand "for the license requested." They contend that this language entitles them, at a minimum, to any reasonable form of license that they may request, even if it is not otherwise required by the Decree.

Finally, on the question of the per-program license, the applicants also cite the anti-discrimination provision of Article VIII. Specifically, they argue that it underscores the drafters' intention that all "licensees" be given "a genuine choice" among the various types of licenses, including the per-program license.

Before addressing these arguments, I briefly summarize the legal standards that govern the resolution of these matters.

A. Standards for Summary Judgment

For ASCAP to prevail on its motion, it must satisfy the court that there is no dispute as to any material fact and that, based on the undisputed facts, it is entitled to judgment as a matter of law. See, e.g., Montana v. First Federal Savings & Loan Ass'n, 869 F.2d 100, 103 (2d Cir. 1989); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987); Falls Riverway Realty, Inc. v. Niagara Falls, 754 F.2d 49, 54 (2d Cir. 1985). It is axiomatic that the role of the court on such a motion "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d at 11; Eastway Constr. Corp. v. New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987). See, e.g., Parsons v. Honeywell, Inc., 929 F.2d 901, 904 (2d Cir. 1991); Branum v. Clark, 927 F.2d 698, 704 (2d Cir. 1991); Twin Laboratories, Inc. v. Weider Health & Fitness, 900 F.2d 566, 568 (2d Cir. 1990); Montana v. First Fed. Sav. & Loan Ass'n, 869 F.2d at 103; Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir. 1989).

The movant bears the initial burden of informing the court of the basis for its motion and identifying those portions of the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Accord, e.g., Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 710 (2d Cir. 1991). If the movant fails to meet its burden, the motion must be denied even if the opposing party does not submit any evidentiary matter to establish a genuine factual issue for trial. Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970).

If the movant carries its initial burden, the burden shifts to the party opposing the motion to demonstrate a genuine dispute as to one or more of the material facts. Celotex Corp. v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552. See also Citizens Bank of Clearwater v. Hunt, 927 F.2d at 710; Greater Buffalo Press, Inc. v. Federal Reserve Bank of New York, 866 F.2d 38, 42 (2d Cir.), cert. denied, 490 U.S. 1107, 109 S.Ct. 3159, 104 L.Ed.2d 1022 (1989). In responding to the motion, the opposing party cannot simply rely on its pleadings or on conclusory factual allegations, or on conjecture as to the facts that discovery might disclose. See, e.g., Gray v. Town of Darien, 927 F.2d 69, 74 (2d Cir. 1991). Rather, the opposing party must present specific evidence in support of its contention that there is a genuine dispute as to the material facts. See, e.g., Celotex Corp. v. Catrett, 477 U.S. at 324, 106 S.Ct. at 2553; Twin Laboratories v. Weider Health & Fitness, 900 F.2d at 568; Montana v. First Fed. Sav. & Loan Ass'n, 869 F.2d at 103; Knight v. U.S. Fire Ins. Co., 804 F.2d at 12; L & L Started Pullets, Inc. v. Gourdine, 762 F.2d 1, 3-4 (2d Cir. 1985). To demonstrate a "genuine dispute," the opposing party must come forward with enough evidence to justify a reasonable jury returning a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986); Citizens Bank of Clearwater v. Hunt, 927 F.2d at 710; Cinema North Corp. v. Plaza at Latham Associates, 867 F.2d 135, 138 (2d Cir. 1989).

B. The "Licensing at the Source" Claim

ASCAP argues that the Decree should be read as a contract; that, so read, it unambiguously precludes cable program suppliers from the protection of Article V(A) — which governs radio broadcasting networks, telecasting networks and wired music services — and that therefore summary judgment should be granted in its favor on this portion of the applicants' petition. As will be seen, I conclude that the language of Article V(A) does not unambiguously support ASCAP's reading, and that with the guidance of appropriate aids to construction, it becomes apparent that in fact the applicants are covered by Article V(A). In view of this conclusion, and the absence of any disputed issues of material fact, the court will enter summary judgment for the applicants on this claim.

1. Interpreting a Consent Decree

We start by noting that, in general terms, ASCAP is correct in asserting that the courts will interpret decrees with the same tools as are utilized in the construction of private contracts. This follows from the fact that "[a] consent judgment, though it is a judicial decree, is principally an agreement between the parties." S.E.C. v. Levine, 881 F.2d 1165, 1178 (2d Cir. 1989). Accordingly, decrees are generally to be interpreted consistently with their "plain meaning" or "explicit language." See, e.g., United States v. Atlantic Refining Co., 360 U.S. 19, 22-23, 79 S.Ct. 944, 946, 3 L.Ed.2d 1054 (1959); Suarez v. Ward, 896 F.2d 28, 30 (2d Cir. 1990); Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985).

The point of this oft-cited observation, and of the frequent admonition to read decrees within their "four corners", is that the decree "represents a compromise between parties who have waived their right to litigation and, in the interest of avoiding the risk and expense of suit, have give[n] up something they might have won had they proceeded with the litigation. . . ." Berger v. Heckler, 771 F.2d at 1568 (quoting United States v. Armour & Co., 402 U.S. 673, 681, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971)). Thus, we are warned that "the scope of the decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it." Fire-fighters Local Union No. 1784 v. Stotts, 467 U.S. 561, 574, 104 S.Ct. 2576, 2585, 81 L.Ed.2d 483 (1984). Accord, e.g., S.E.C. v. Levine, 881 F.2d at 1178-79; Berger v. Heckler, 771 F.2d at 1568. To do otherwise, by ignoring plain language and meaning, would deprive one of the parties to the decree of the benefits for which he bargained and in exchange for which he "waived his right to litigate the issues raised, a right guaranteed to him by the Due Process Clause." United States v. Armour & Co., 402 U.S. at 682, 91 S.Ct. at 1757. Accord, e.g., S.E.C. v. Levine, 881 F.2d at 1181.

Notwithstanding the stringency of these strictures, they necessarily are limited to cases in which the relevant provisions of the decree have a clear and unambiguous meaning. If the language utilized has only one reasonable interpretation, see generally Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525, 528 (2d Cir. 1990); Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9-10 (2d Cir. 1983), then the court must look exclusively to the language found in the decree. See United States v. Armour & Co., 402 U.S. at 680-83, 91 S.Ct. at 1756-58. If, however, the wording is susceptible to more than one reasonable construction, then the court must look to extrinsic evidence, as is the case with ambiguous contracts. See, e.g., United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 95 S.Ct. 926, 935, 43 L.Ed.2d 148 (1975); S.E.C. v. Levine, 881 F.2d at 1179; Schurr v. Austin Galleries of Illinois, Inc., 719 F.2d 571, 575 (2d Cir. 1983). As noted by the Supreme Court in ITT,

  [s]uch aids include the circumstances surrounding
  the formation of the consent order, any technical
  meaning words used may have had to the parties,
  and any other documents expressly incorporated in
  the decree.

420 U.S. at 238, 95 S.Ct. at 935.*fn5

The reference in ITT to "the circumstances surrounding the formation of the consent order" encompasses not only traditional parol evidence — that is, the representations made by the negotiators to each other in the course of the negotiations, see e.g., Roberts v. Consolidated Rail Corp., 893 F.2d 21, 24 (2d Cir. 1989); Pantone, Inc. v. Esselte Letraset Ltd., 691 F. Supp. 768, 774 (S.D.N.Y. 1988), aff'd, 878 F.2d 601 (2d Cir. 1989) — but also any meaningful indicia of the purpose, if any, of the contested provision. This point was made, somewhat elliptically, by the Supreme Court in ITT when it took pains to distinguish its prior comment in United States v. Armour & Co. that "the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve." 402 U.S. at 681-82, 91 S.Ct. at 1757 (emphasis in original). As the Court noted in ITT, this comment, and similar remarks found in United States v. Atlantic Refining Co., 360 U.S. at 22-23, 79 S.Ct. at 946, and Hughes v. United States, 342 U.S. 353, 356-57, 72 S.Ct. 306, 308, 96 L.Ed. 394 (1952), all were made only after the Court had found the disputed decree language to be unambiguous. Therefore, the Court in those cases was in effect simply declining to change the parties' prior bargain to serve the asserted policies of the statute under which the decree had been entered. See 420 U.S. at 235-37, 95 S.Ct. at 933-35. The obvious point is that if the defendant did not bargain for unambiguous language precluding the competing interpretation, the court is not limited in what data it may look to in discerning the proper meaning of the decree, and in particular it may look to equitable considerations that flow from the statute underlying the decree and the fact that, in this respect, the decree is a court order as well as a contract. See, e.g., United States v. American Cyanamid Co., 719 F.2d 558, 564 (2d Cir. 1983), cert. denied, 465 U.S. 1101, 104 S.Ct. 1596, 80 L.Ed.2d 127 (1984).

The Court in ITT further distinguished the three earlier cases by noting that in each of them the Government was seeking to punish past conduct by the defendant, whereas in ITT the parties were seeking simply to define the parameters of required future conduct by the defendant under the decree. Id. 420 U.S. at 237, 95 S.Ct. at 935. This point is of course consistent with caselaw that has required that criminal statutes and injunctions be sufficiently specific to guide the defendant's conduct before he may be punished for non-compliance. See, e.g., Kolender v. Lawson, 461 U.S. 352, 357-58, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983); Pasadena City Bd. of Educ. v. Spangler, 427 U.S. 424, 438-39, 96 S.Ct. 2697, 2705-06, 49 L.Ed.2d 599 (1976).

These same two distinctions have since been echoed by the Second Circuit, which has also emphasized that where the decree language is ambiguous and all that is at issue is future conduct, "a court of equity may, in construing the provision, consider the purpose of the provision in the overall context of the judgment at the time the judgment was entered." United States v. American Cyanamid Co., 719 F.2d at 564. Accord, e.g., United States v. Western Elec. Co., 894 F.2d 1387, 1391-92 (D.C. Cir. 1990). See also ASCAP v. Showtime/The Movie Channel, Inc., 912 F.2d at 570 (noting that "context" of 1950 Decree reflects intent to "disinfect" ASCAP "as a potential combination in restraint of trade. . . .") (quoting K-91, Inc. v. Gershwin Publishing Corp., 372 F.2d 1, 4 (9th Cir. 1967), cert. denied, 389 U.S. 1045, 88 S.Ct. 761, 19 L.Ed.2d 838 (1968)); cf. United States v. County of Nassau, 907 F.2d 397 (2d Cir. 1990) (per curiam) (affirming refusal to modify decree, in part based on conclusion that change "would undermine the purpose of the decree").

With an eye to these general standards, I turn to the parties' respective interpretations of Article V(A).

2. Are the Applicants Covered by Article V(A)?

a. The Purpose and Context of Article V(A)

As noted, ASCAP presses the view that the coverage of the terms "telecasting network" and "stations . . . affiliated with such . . . television network" should be limited to the three major over-the-air networks — ABC, CBS and NBC — all of which were in existence when the Decree provision in question was drafted and approved, and should certainly not extend to the applicants. In advancing this conclusion, ASCAP seems to make two slightly different, yet related, arguments. First, it suggests that since cable television was not yet contemplated, much less developed, by 1950, the drafters of the Decree could not have intended to include it within the scope of Article V(A). Second, ASCAP argues that in any event the method of operation of the applicants is so different, both technologically and financially, from the over-the-air television networks that they belong to an entirely different genus of mass media, and hence are not covered by the Decree.

We start our analysis of ASCAP's first argument by noting that the relevant language of Article V(A) is ambiguous. The Decree refers to "a . . . telecasting network," rather than, for example, "one of the existing television networks" or "a network that engages in telecasting by over-the-air broadcast," and it does not define or otherwise explain this term in any respect. Although it is conceivable from the wording that the drafters may have intended to cover only the then-existing three networks, or only such entities as thereafter operated in virtually the same technological and financial manner, that reading is not compelled by the language used. An alternative reading, which is at least equally plausible solely from the face of the Decree, is that this provision was intended to cover any entity that — like the then-existing networks — assembled a unique package of television programming which it supplied to a number of locally-based telecasters with which it maintained a contractual relationship, and which in turn transmitted that programming, under the program supplier's name, to the televisions in its locality. So construed, the Decree would cover the cable program suppliers.

As noted, the 1941 Decree, although imposing some restrictions on ASCAP's licensing methods generally, embodied specific limitations solely with respect to only one medium of mass communication, the radio industry. Among the limitations imposed on ASCAP in its dealings with radio broadcasters was the requirement that it must issue licenses to the radio networks that would encompass the performance of network programming "by all stations on the network," and that it must refrain from seeking a separate license from the local stations for such programming. (1941 Decree at Art. (II)(4).)

Although the Decree does not explicitly state the reason for the inclusion of this requirement, it is not difficult to discern in context. ASCAP became a target of the Government because of its potential ability to control a significant portion of the market for music used in non-dramatic public performances, whether on radio or in other settings. In the context of a network-affiliate relationship, such potential control could be very effectively exploited to extract non-competitive fees by the simple expedient of demanding not only a license from the network — which conceivably has some bargaining power by virtue of its ability to control the choice of music to be included in its network programming — but also a separate license from each of the affiliated stations, which lack this leverage since they do not control what music is included in the network programming that they air. Indeed, the Government's 1941 complaint alleged this precise form of abuse. (See Complaint at pp. 7-8, 14-15, attached to USA Network Memorandum in Opposition at Exh. F.) By limiting ASCAP to a license with the radio networks themselves, Article II(4) balanced the playing field to a degree and spared the local stations from facing the unenviable choice of either paying whatever ASCAP demanded or foregoing network programming.

This interpretation is given added support both from other language in the 1941 Decree and from later history. Article II(3) of the 1941 Decree required ASCAP to offer radio broadcasters a per-program license on request on terms that would not frustrate "the purpose of this subparagraph to afford radio broadcasters alternative bas[e]s of license compensation." This language explicitly confirms the obvious — that the Decree was designed to limit ASCAP's ability, by pooling copyrights for large amounts of music used in radio broadcasting, to extract unreasonable fees for performance of the music. The availability of per-program licenses, if reasonably priced as compared to the alternative blanket license, was one means of accomplishing this purpose, since it gave the broadcaster the ability to minimize its fees either by limiting the number of programs on which it played ASCAP music, or possibly by seeking direct licensing from the composers, see, e.g., Buffalo Broadcasting Co. v. ASCAP, 744 F.2d 917, 926 n. 7 (2d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1181, 84 L.Ed.2d 329 (1985), a possibility that was kept at least theoretically alive by the additional requirement that ASCAP members give the Society only a non-exclusive agency to license their music. (1941 Decree at Art. II(1).) The stated purpose of the per-program requirement thus accords fully with our understanding of the purpose of the "licensing at the source" provision.

Subsequent events underscore our reading of Article II(4) of the 1941 Decree and offer a clearer view of the intended scope of the equivalent provision in the 1950 Decree. As noted, ASCAP, although precluded by the 1941 Decree from splitting the performance rights in network radio programming, proceeded to use essentially the same technique in connection with the film industry. As recapitulated in Alden-Rochelle, ASCAP licensed only the "synchronization" right to the movie producer, and insisted on separate licenses for the performance rights to the music from all local movie theatre exhibitors. See Alden-Rochelle v. ASCAP, 80 F. Supp. at 894. This practice was condemned as an antitrust violation both in Alden-Rochelle and in the parallel Minnesota litigation, M. Witmark & Sons v. Jensen, because it enabled ASCAP to extract extortionate fees from the exhibitors, since they faced the same choice as the local radio stations before the 1941 Decree — either pay what ASCAP demanded or forego any films or programming that incorporated ASCAP music.*fn6

It was apparently the holding of Alden-Rochelle and the emergence of television as a new medium of mass communication, as well as complaints to the Justice Department about the adequacy of the 1941 Decree, that gave impetus to the 1950 amendments to the Decree. (March 13, 1950 Tr. at 2, 7-8, annexed to ASCAP Memorandum). In this historical context, the 1950 Decree added provisions explicitly incorporating Alden-Rochelle-type relief for the movie industry and extended the specific protections of the 1941 Decree — including both the requirement for one license to cover the public performance of network programming and the availability of per-program licenses to radio broadcasters — to all forms of mass communication known at the time that might utilize significant amounts of ASCAP music. This effort at inclusiveness is apparent both from the face of the Decree and from the contemporaneous representations of the negotiators.

As noted, the Decree addresses radio, motion pictures, wired music and television, and it contains no language limiting its application to defined segments of any of these industries. Accordingly, on its face the Decree appears to apply to television programming transmitted to the public irrespective of the technology used to make the transmission. Furthermore, the language of Article V(A) can most fairly be read to cover not only any technology for transmission of television programming into the home, but also any financial arrangement between the original packager of programming identified with the packager and the entity that transmits that packaged programming to television viewers. The problem that Article V(A) addresses is potentially found whenever programming is packaged by an entity for transmission to the public by another entity, and the solution adopted by the Decree rests on the fact that the packager ...


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